CLIENT GOALS & CONSTRAINTS PART II AND CLIENT EDUCATION
Chapter notes, video classes, MCQ practice tests and quick-revision one-liners for Retail Banking and Wealth Management — JAIIB.
One-liners from this chapter
Free sample — 8 of 66 rapid-fire Q&A cards.
What is a client's 'risk capacity' as distinct from 'risk tolerance' in wealth management?
Risk capacity is the objective financial ability to absorb losses without jeopardising goals, whereas risk tolerance is the subjective psychological willingness to accept volatility. Both must be assessed together before recommending a portfolio.
What is a 'return objective' in an Investment Policy Statement (IPS)?
Target rate of return needed to meet client goals
Which SEBI regulation mandates that investment advisers assess the client's financial situation before providing advice?
SEBI (Investment Advisers) Regulations, 2013 require advisers to conduct a suitability assessment covering income, net worth, investment horizon, and risk profile before giving any advice.
What is 'goal prioritization' in personal financial planning?
Ranking goals by importance and urgency for resource allocation
What is the concept of 'goal-based investing' in retail wealth management?
Goal-based investing maps each financial goal (child's education, retirement, home purchase) to a separate portfolio with its own time horizon, risk level, and return target rather than managing all assets as one pool.
What is a 'capital preservation' objective in wealth management?
Protecting the principal amount from loss
How does a client's time horizon affect asset allocation recommendations?
Longer time horizons allow greater exposure to equity since short-term volatility can be ridden out, while shorter horizons necessitate a conservative mix favouring debt and liquid instruments to protect capital.
What is 'income generation' as a client investment goal?
Creating regular cash flows from invested assets
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